CP Rail looks to divest rail line west of Tracy

Canadian Pacific (CP) announced last week that it is seeking interested parties to take over the west end of the former Dakota, Minnesota & Eastern Railroad (DM&E). CP would divest all the DM&E rail lines west of the division point of Tracy. That would include all its trackage in South Dakota, Nebraska and Wyoming. The railroad said it was “inviting expressions of interest from prospective partners” for the lines.

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Granite Falls Advocate Tribune

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Posted Dec. 18, 2012 at 1:25 PM
Updated Dec 18, 2012 at 1:27 PM

Posted Dec. 18, 2012 at 1:25 PM
Updated Dec 18, 2012 at 1:27 PM

Canadian Pacific (CP) announced last week that it is seeking interested parties to take over the west end of the former Dakota, Minnesota & Eastern Railroad (DM&E). CP would divest all the DM&E rail lines west of the division point of Tracy. That would include all its trackage in South Dakota, Nebraska and Wyoming. The railroad said it was “inviting expressions of interest from prospective partners” for the lines.

Included are approximately 660 miles of former Chicago & North Western Railroad track that was sold to DM&E in 1986. It includes the lines from Tracy to Rapid City, S.D.; north of Rapid City to Colony, Wyo.; and south of Rapid City to Dakota Jct., Neb. Also included are three South Dakota branch lines: a 27-branch from Redfield to Mansfield, a 15-mile line from Blunt to Onida, and 12-mile line east of Huron toward Watertown, S.D. CP has operated the lines since it assumed operational control of the Dakota, Minnesota & Eastern in 2007. A number of grain, ethanol, clay, and merchandise customers are served by the lines. Also included is the roundhouse/shop facility in Huron, S.D.

“This portion of the CP network would be an attractive and highly viable opportunity for a low-cost operator. There is a strong long-term franchise here for an operator willing to maintain high quality service and explore growth opportunities with existing and future customers,” said E. Hunter Harrison, President and CEO. “CP has successfully built many partnerships with short line and Class 1 railroads throughout its system and we look forward to assessing the ways interested parties could work together with us to deliver quality service to customers on the west end of the DM&E through an innovative partnership.”

So far, no decision has been made to sell the rail line but CP said it will be contacting interested parties seeking expressions of interest this month, and that it would continue to serve all shippers on the lines while it works with interested parties and evaluates proposals.

“We have undertaken similar reviews on other portions on our network in the past that have resulted in positive outcomes for shippers, employees, and operators,’’ Harrison added.

The line was once regarded as another possible route for the shipment of unit coal trains originating in the Powder River Basin coal fields in eastern Wyoming. A study was undertaken and consequently permission was obtained from the federal Surface Transportation Board to build a new rail line from a point near Wasta, S.D. around the south end of the Black Hills and into the Wyoming coal fields.

At the same time, prior to acquisition by Canadian Pacific, DM&E had, in recent years, made extensive upgrades to the line in response to improved traffic and in anticipation of the arrival of the mile and a half long coal trains.

Page 2 of 2 - The coal train shipping plan had caused extensive controversy in some communities most notably Rochester where opposition to the plan was based on its proximity to the Mayo Clinic in downtown Rochester. Opponents there were pushing for a rail line by-pass to be built around the community, something the railroad was resisting.

With this week’s announcement by CP, the plan for moving heavy coal trains along the line, which is roughly parallel to U.S. Highway 14 across South Dakota and Minnesota is unlikely to happen.